NY Times: Consumers Lean on Rebate Checks for Bills and Gas

[marmar]

Consumers Lean on Rebate Checks for Bills and Gas


By PETER S. GOODMAN
Published: June 1, 2008


MIAMI — The federal government is showering households with tax rebates to spur spending and invigorate a troubled economy. But many Americans are so consumed with debt and the soaring price of gasoline that they are opting to save the money or use it to pay bills, according to surveys, sales data and interviews with people from Florida to California.

Between late April and the end of last week, the Treasury handed out more than $50 billion of the $100 billion in tax rebates it plans to distribute to 132 million households. But only once in the last six weeks have chain stores registered an increase in sales, according to the International Council of Shopping Centers, whose weekly sales survey is a widely watched barometer.

“The initial sense is that people are not running out to the malls to spend their checks,” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. “It’s not quite proving to be a hot potato that’s burning a hole in people’s pockets.”

Here in Miami, where the economy remains stuck in the orbit of plummeting real estate prices, Guillermo Gonzalez is one of those using their tax rebates to dig out of debt.

A wine salesman who makes about $60,000 a year, Mr. Gonzalez received $1,033 via direct deposit. He understood the implicit invitation to spend it on a new gadget or a family vacation, but he was behind on his house payments, he said. As gasoline costs have doubled in recent months, and as grocery prices have spiraled higher, he has been struggling to pay the bills. With a click of the mouse, he sent the whole rebate to the mortgage company.

“They think they give you a check to go out and spend some money, but it’s not enough,” said Mr. Gonzalez. “The dollar doesn’t buy anything anymore. The way the economy is going, people are too scared to spend.”

Economists emphasize that the data remains preliminary, making it too early to assess the effectiveness of the rebates. And those who are paying off bills are potentially clearing the path for more spending later on. ......(more)

The complete piece is at: http://www.nytimes.com/2008/06/01/business/01checks.html?_r=1&oref=slogin

[RoseMead]

1. "Showering" ?

"The federal government is showering households with tax rebates to spur spending and invigorate a troubled economy."

More of a dribble than a shower, if you ask me.